Skeptics might argue that the European Union has everything Vice President Al Gore could want: $5-per-gallon gasoline prices; endless regulations; free health care and college education; powerful labor unions; social democrats in every rung of government; and, to crown the glory, an "A" from the International Monetary Fund in a new report published last month.

But the economic performance of the 11 out of 15 EU nations that have adopted the fragile euro as their international exchange currency remains problematic and troubling, despite all the efforts of the IMF report to paint it otherwise.

On July 5, in one of its periodic assessments of the economic health of different parts of the world, the IMF released its Concluding Statement of the IMF Mission on the Economic Policies of the Euro Area.

Referring to the 11 European countries that adopted the euro on Jan. 1, 1999, the report began "The euro-area economy is doing very well," and concluded that "a year and a half into the (European) monetary union, the enterprise is proving increasingly promising."

The report is hardly captivating reading. It is written in economic jargon and double-speak and, at four single-spaced pages, it is still too long.

But these flaws are minor compared with the report's major problems: contrary to the IMF's economists, the euro-area is not doing particularly well in comparison with non-euro areas of the world, and the IMF has made no attempt, systematic or otherwise, to link improvements with the adoption of the euro.

Through the bureaucratic haze, three central themes clearly emerge that should trouble Europeans and Americans alike.

First, the euro is given substantial credit for economic growth and lower unemployment in member countries, after years of little or no growth.

Over the past year Gross Domestic Product (GDP) growth was 3.4 percent and the unemployment rate was 9.2 percent. However, this data is not very different from European nations that have not adopted the euro or from other major industrialized nations outside Europe.

Last year saw a global expansion, led primarily by the United States, and all countries gained.

Consider the performance of other countries within Europe that retained their own currencies. Over the past year Sweden, Switzerland, and Britain had growth rates that were within half a percentage point of the euro-zone nations and unemployment rates that are far lower.

Britain's growth rate was 3 percent and its unemployment rate was 5.6 percent. Switzerland's growth rate was 3.4 percent and it had unemployment of 1.8 percent.

Outside Europe, the United States, Canada, and Australia had growth rates a percentage point or more higher than the euro zone, with significantly lower unemployment.

The United States, which leads the world in most economic indicators, had a growth rate of 5.1 percent and has an unemployment rate of 4 percent.

Second, the region's recent modest economic growth is attributed to the same high "tax and spend" government policies that produced slow growth and high unemployment. Even more troubling, the IMF economists think the only value of cutting taxes is to lure more workers into the economy.

The report praises "cyclically-neutral fiscal positions," which, in plain language, means no tax cuts, and says that after a balanced budget is achieved in 2002 policies should be set so that "all tax receipts arising from growth in excess of potential are assigned to debt reduction or funding future pension liabilities."

To the IMF, government agencies know better how to spend taxpayers' money than the taxpayers themselves.

Finally, it is surprising that a region with ubiquitous government interference in practically every aspect of life -- and, coincidentally, nearly double-digit unemployment -- received such praise in an economic report.

The economic history of the 20th century has demonstrated that those countries with lower taxes and less regulation progress faster than those with the reverse.

The choice of currency is not a miracle cure for economic maladies; rather, a single currency makes it harder for individual countries to control their fiscal policies.

In France, for example, one of the countries that has adopted the euro, workers are forbidden from working more than 35 hours a week. Police inspect workplaces, checking for cars in parking lots, to ensure that workers have left for home.

This law could be partly responsible for the decline in unemployment in France over the past year, from 11.4 percent to 9.8 percent, but it is not even mentioned, much less criticized, in the report.

One of the report's greatest flaws is that it compares the euro-area with itself, rather than with more successful economic systems.

Britain, Asia and North America have shown greater opportunities for economic activity, yet these are barely mentioned in the report.

All nations of the world have experimented to a lesser or greater extent with socialism, but the euro-area's trials have been especially persistent.

After decades of failed socialist policies, unemployment is higher in the euro-area because there are ever-expanding cradle-to-grave guaranteed benefits irrespective of achievement. Insurance against many of the risks and joys of life are paid for by the government. Many make the rational choice: why work if you don't have to?

The growth opportunities in the United States relative to the euro-area are particularly evident in immigration policy.

Ambitious people from around the world, including the euro-area, continue to flood into the United States. They seek opportunity to develop their skills. The United States has used immigration as an engine of growth. Needless to say, immigration policy is never once mentioned by the IMF.

The euro-area suffers not just from anemic economic performance but from lack of ambition.

Great American corporations such as Microsoft, Intel, and Cisco Systems emerge where government regulation is absent. Major euro-area corporations such as Airbus, Deutsche Telekom, and Telecom France often emerge as statist enterprises.

No matter how much praise from the IMF, even a new currency cannot paper over the euro-area's systematic problems.

Diana Furchtgott-Roth is a resident fellow at AEI.